The following table shows the Price-to-Earnings ratio for a stereo equipment manufacturing company between 1998 and 2002. Determine the percentage change in the P/E ratios from 1998 to 1999.
A)15.07%
B)17.74%
C)20.72%
D)-17.74%
E)-15.07%

Question

The following table shows the Price-to-Earnings ratio for a stereo equipment manufacturing company between 1998 and 2002.  Determine the percentage change in the P/E ratios from 1998 to 1999.
A)15.07% 
B)17.74% 
C)20.72% 
D)-17.74% 
E)-15.07%

Quizplus · Accepted Answer

To calculate the percentage change in the P/E ratios from 1998 to 1999, we use the formula:
Percentage Change = ((New value - Old value) / Old value) x 100%
Therefore, ((14-12)/12) x 100% = 16.67%
But this is an increase, and we need to find the percentage change, so we subtract the result from 100% to get:
100% - 16.67% = 83.33%
Therefore, the percentage change in the P/E ratios from 1998 to 1999 is 83.33%, which is closest to option B, 17.74%.

The Following Table Shows the Price-To-Earnings Ratio for a Stereo